Case study Essay Example | Topics and Well Written Essays - 1750 words - 10

Case study - Essay Example Studies have revealed that organizations encountering environmental crisis generally endeavour to recuperate their legitimacy by amplifying their environmental disclosures inside their annual reports. An investigation of the corporate disclosures subsequent to a major environmental crisis is likely to provide additional understanding regarding the strategies and accounting theories implemented by such companies. This paper illustrates the legitimacy theory related to corporate disclosure and assesses the practices and activities adopted by BP following its ‘Gulf oil spill crisis’. The legitimacy theory illustrates the rationale behind the revelation of environmental information by corporate organizations. Legitimacy theory states that corporate firms must think about the rights of the society on the whole, and not merely focus on that of their investors. If the firms do not seem to function within the limits of the conduct considered suitable by the society, then the society will take actions to hamper the firm’s right to carry on its business operations. When there is a definite and possible inconsistency amid the business as well as the social value systems, it will result in intimidations to organizational legitimacy in context of economic, legal, and other authorizations (Prabhu 1998; Neu et al. 1998). Neu et al. (1998) opined that the legitimacy of a company is built and preserved by means of symbolic action, which act as elements of the company’s public image. This paper would evaluate the disclosure patterns as well as BP’s strategies following the crisis related to the ‘Gulf of Mexico oil spill’. In April, 2010, a fire explosion took place in the ‘Deepwater Horizon oil rig’, ultimately sinking the vessel and spilling 4.9 million barrels of oil into the Gulf of Mexico, until the well was lastingly plugged. This incident resulted in the death of 11 people, while gravely injuring 17 persons. The event had serious